Complex dynamic behaviors of constrained supply chain systems

Nonlinear supply chain inventory system models with forbidden returning and limited supply capacity are established in piecewise linear form. Stability analysis and simulation results show that under certain parameter settings, improper inventory cutoff by supply chain upstream participants may lead to complex dynamic behaviors of the whole supply chain inventory system. This finding is confirmed by calculating maximal Lyapunov Exponent. The statistical frequency of system states is derived. Results suggest that trade-off exists between inventory holding cost and system dynamic complexity. Target inventory level should be carefully set to ensure smooth operation in supply chains.